Virtual currency reappears collective "flash crash" bubble narrative urgently needs supervision and correction

　　The virtual currency bubble narrative urgently needs supervision and correction

　　Zhang Jingwei

　　In the midday of December 4th, virtual currencies reappeared a collective "flash crash". Bitcoin slumped 10,000 US dollars in the afternoon, and the 24-hour decline was once more than 20%.

According to the "Securities Times" report, the latest data shows that in the past 24 hours, a total of 417,000 people have liquidated their positions, and the amount of digital currency contracts on the entire network has reached US$2.584 billion (approximately RMB 16.4 billion).

Among them, the amount of Bitcoin's liquidation within 24 hours alone exceeded $1 billion.

This year, the virtual currency can be called "failure for the passing years", and it has fallen sharply and burst its position many times.

　　Virtual currency is a game for tech gurus and capital tycoons. It has become a vehicle for speculation and has triggered a gathering of speculators.

It can be seen that the lack of fuzzy space for supervision, the technological label and algorithmic advantages of virtual currencies, has become a gimmick advocated by speculators.

The narrative of the virtual currency bubble is not just a virtual capital game—the carnival of individual capital bosses who break through existing supervision and the tragedy of most followers, but also consumes a lot of power resources.

The unique algorithm of virtual currency requires a lot of power resources.

Data shows that the world consumes 134 billion kilowatt-hours of electricity on the "mining" of virtual currencies.

For every bitcoin “produced”, the energy consumed is equivalent to the electricity consumption of a family of three in one year.

　　The brutal growth of virtual currency will create more difficult-to-control capital accumulation and hype effects in the virtual space of the network.

When capital is caught in the virtual currency game and ordinary people are keen to hype virtual currency, the entire system in the real world will have a weak foundation.

When the international community pays more attention to climate change and new energy, the behavior of virtual currency to consume a lot of power resources has also made virtual currency notorious.

The financial products that lack supervision, the more unpredictable the label, the more hype effect can be formed, and the greater the risk of aggregation.

　　There are many reasons for this virtual currency crash.

The market panic caused by the attack of the Omi Keron strain has hit the three major U.S. stock markets, and other stock markets around the world have also been affected.

Virtual currencies involved in the speculative market are naturally also affected by market panic.

The virtual currency was originally overvalued, and the decline was naturally large.

The trend of the Fed turning to hawks has also had an impact on the virtual currency market.

　　More importantly, the world has begun to focus on the supervision of virtual currencies, and a consensus to curb the brutal hype of virtual currencies is being formed.

There is a degree in everything. Virtual currency has been in the virtual world for a long time, and it has repeatedly created bubble narratives, coupled with high-energy mining behavior, which has made the global central banks in the epidemic era intolerable.

If measures are not taken to strengthen supervision, virtual currency will become a wild horse, bringing systemic risks to the existing financial system.

Moreover, the global central bank will not agree to the combination of technology and capital tycoons to form emerging forces that are difficult to control.

　　Since the beginning of this year, from G7 (Group of Seven) to G20 (Group of Twenty) and then to major countries, the world has increased the consensus on digital currency supervision.

From developed economies to emerging markets, while regulating the existing virtual currency market, they are discussing the rules for incorporating virtual currency into the existing regulatory system.

　　China has provided the world with the experience of combining blocking and dredging. On September 4, 2017, the People's Bank of China and the Office of the Cyberspace Administration of China issued the "Announcement on Preventing the Risk of Token Issuance Financing".

On September 24 this year, ten departments including the People’s Bank of China jointly issued the “Notice on Further Preventing and Disposing of the Risks of Virtual Currency Trading Hype”, emphasizing that virtual currency-related business activities are all illegal financial activities. Services provided by domestic residents are also illegal financial activities.

On the same day, the National Development and Reform Commission and other eleven departments jointly issued the "Notice on Renovating Virtual Currency "Mining" Activities" to rectify the "coin speculation" pattern across the entire chain.

While strict supervision is blocking the side door, the digital renminbi has also opened up multi-scenario applications.

　　It can be seen that putting on the curse of orderly supervision of virtual currency will promote the butterfly change and update of digital currency.